How to Calculate the Minimum Tax Liability if Land Ownership Is Not for the Entire Year
The State Tax Service of Ukraine reminded that when calculating the minimum tax liability (MTL), the key factor is the actual period of ownership or use of the land.
As explained by the Ministry of Finance of Ukraine in response to the State Tax Service's inquiry, if during the calendar year the plot passes from one owner or user to another (including under lease, sublease, or emphyteusis agreements), the MTL is distributed between them proportionally to the time of use.
Specifically:
- the previous land user pays the MTL for the period from January 1 until the month when the right ended;
- the new one – starting from the month of acquiring the right to the plot.
At the same time, the amount of the MTL is included in the total tax liability of each participant separately, proportionally to the period of actual ownership or use of the land plot.
Thus, the minimum annual amount of the MTL established by the provisions of the Tax Code of Ukraine is subject to adjustment depending on the number of months of actual land use. This allows for a more accurate distribution of the tax burden among taxpayers and avoids charging liabilities for periods when the land plot was not actually in their use.
Recall that according to the provisions of the Tax Code of Ukraine, the minimum annual amount of the MTL is:
- not less than 700 hryvnias per 1 hectare in general;
- not less than 1400 hryvnias per 1 hectare for plots where arable land exceeds 50%.
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